Felix Salmon

The value of a Nobel prize

November 3, 2011

Dealbook’s Azam Ahmed explains why hedge fund Hutchin Hill has hired this year’s Economics Nobel laureate, Thomas Sargent:

The downside of the beauty of physics

November 3, 2011

We have an excerpt of Emanuel Derman’s new book today. I can highly recommend both the excerpt and the whole book, which is a very readable generalist’s guide — by a physicist-turned-quant — to models, their uses, and their abuses.

Why Groupon won’t raise its IPO price

November 3, 2011

Dan Primack gives three reasons why Groupon isn’t going to raise its IPO price by a buck or two today. The most important is #2: Groupon really wants to allocate shares to people who aren’t going to simply flip them on day one. If it can use a slightly lower share price to attract long-term buy-and-hold investors, it’ll happily do so.

Europe’s doomed fate

November 3, 2011

This is beginning to feel like 2008, complete with all the rumor and chaos and volatility we saw back then. MF Global is a bit like those Bear Stearns hedge funds which went bust — an isolated datapoint in one respect, but ominous in many others. And right now the best case scenario is that Greece ends up being Bear Stearns, rescued by an international community petrified of what might happen in the event of a chaotic collapse.

Counterparties

November 2, 2011

Morgan says its exposure to Spain is $500 million; a regulator says its $25 billion — Bloomberg

Was MF Global brought down by an accounting play?

November 2, 2011

Bethany McLean has a theory: that accounting helped to sink MF Global, and that the $6.3 billion long position in European debt was made “for an accounting play”.

All bank regulators are captured

November 2, 2011

Sheila Bair aims her fire squarely at Europe’s banks and their regulators today, contrasting the high degrees of leverage and low degrees of capital in Europe to the safer banks we have here in the US.

Counterparties

November 1, 2011

Just a few of the many links on Counterparties.com today:

“It’s all over. The government is about to collapse,” says one Greek official — Guardian

Why the big banks aren’t sweating Bank Transfer Day

November 1, 2011

It’s Bank Transfer Day on Saturday, and some unknown number of people are going to transfer their money from their too-big-to-fail bank to a friendly local community bank or credit union. Good for them! Unfortunately, Bank Transfer Day is happening the week that MF Global declared bankruptcy, with the possible loss of some $700 million in client funds. And the net effect of the two is almost certainly going to be money flowing in to TBTF banks, rather than out of them.